Last Friday saw the employment tribunal judgement of two former Uber drivers as they were declared employees, rather than self-employed workers contracted by the taxi app.
James Farrar and Yaseen Aslam argued that they were employed by the San Francisco-based taxi app, but did not receive any basic employee rights.
The ruling means that the drivers should have been receiving a whole host of benefits available to employees, including payment of the national minimum wage, holiday and sick pay.
After expenses, Farrar said his earnings amounted to £5.03 an hour.
Uber claimed that their status as an app meant they were not employers as the contract exists between solely the driver and the customer.
The ruling found Uber’s argument implausible, commenting: “The notion that Uber in London is a mosaic of 30,000 small businesses linked by a common ‘platform’ is to our mind faintly ridiculous.”
Jo Bertram, Uber’s UK manager, said: “Tens of thousands of people in London drive with Uber precisely because they want to be self-employed and their own boss.
“The overwhelming majority of drivers who use the Uber app want to keep the freedom and flexibility of being able to drive when and where they want. While the decision of this preliminary hearing only affects two people, we will be appealing it.”
The company, who contract over 40,000 drivers in the UK, now face more claims for other drivers for back pay and holiday pay.
Effect on contractors
As the entire case rested on the court’s interpretation of employment status, it’s likely that thousands of contractors throughout the UK will be affected by the judgement.
While it’s too early to predict the long-term outcome for contractors, it’s possible the outcome will cause companies to be put off hiring self employed workers.
Commenting on the outcome of today’s Uber case, Dave Chaplin, CEO of ContractorCalculator expressed his concern over how the case will affect contractors, speculating that it will “arm HMRC with the ammunition to attack genuine freelancers under the rules of IR35”.
Chaplin went on to recommend self employed contractors “seriously consider their IR35 position” in light of the tribunal outcome.
IR35 and the gig economy
It’s clear from the tribunal ruling that IR35 isn’t yet adapted for the growing gig economy, as Andy Hood, head of emerging technologies for AKQA, explained.
He said: “Current laws do not apply well to the gig economy. The people who provide the services that ‘platforms’ such as Uber and Airbnb offer are not really ‘self-employed’ as we would normally understand that term, nor full-time employees – but something in-between.”
Hood added: “The gig economy will be in something of a state of flux until global legislation catches up with what amounts to a new class of worker.”
If you’re concerned that you might be within IR35, you can double check by having a look at our handy guide.
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MAAT and ICPA accountant, with a passion for making accountancy and bookkeeping accessible. Other interests include cloud-based software development for web and mobile access, keeping fit, reading, and entrepreneurship.